Foreign (non-U.S.) companies may be surprised to learn that they have U.S. tax withholding responsibilities when their employees work in the U.S. but are paid overseas.
According to the U.S. Internal Revenue Code, a company (employer) is required to deduct federal income and social security taxes from the wages of its U.S. tax resident employees (employees who work in the US). The employer must file the employer’s quarterly tax return (From 941), where he reports the amount of income and social security tax withheld during the period and a Federal Tax Deposit Form must be filed with the payment of the withholding taxes the month after closing each quarter.
The question could be more legal than tax-related, however it is clear that the contract signed by both parties will determine the jurisdiction in case of a litigation or separation of both parties.
Below are some more details for foreign employers with their employees working in the United States (i.e., for their U.S. entity) who are paid overseas (e.g., France):
If you want to know more or meet with our fiscal expert, joins us for our workshop in Paris on March 28!